China's official urban jobless rate rose slightly year-on-year to 2.9 per cent of the population at the end of June, with the number of registered unemployed 9.4 per cent higher year-on-year, amid increasing losses and plunging profits in the state sector.

The benchmark unemployment rate in the first half was up 0.01 per cent from a year earlier, and is expected to be within the government target of 3 per cent by the end of the year, according to Ministry of Labour figures quoted by Xinhua (the New China News Agency).

Economists said that China's real unemployment situation was getting worse, one of the important factors that has prompted Beijing to relax money supply and increase loans to the state sector, the largest employer with more than 100 million workers.

The ministry said state-owned and collectively owned firms, aiming for higher efficiency and better profits, 'have seen their ability to take in workers shrink. The jobless rate will continue to rise as a considerable number of enterprises are unwilling or refuse to sign contracts with workers,' it said.

By the end of June, the number of unemployed was 5.25 million, up 9.4 per cent over the previous year.

More than 1.64 million unemployed people found jobs in the first six months, but 1.63 million were laid off during the same period.

The booming private economy has managed to absorb some workers - taking on 910,000 more than a year ago, compared with 810,000 more by state enterprises.

Dai Xianglong , governor of the People's Bank of China, has said that China's real urban unemployment was about 8 per cent of the workforce if the more than seven million workers who have been sent home with minimum wages were counted.

He said the Chinese banks were ready to help as lending in the first half of the year was up by more than 100 billion yuan from a year ago.